Finding a winning strategy

Florence Gatome Closing the gap between strategy and execution is one of the greatest challenges faced by business leaders today. Indeed, almost all corporate leaders struggle with developing a strategy that works. According to a recent study, 50 per cent of leaders do not believe they have a winning strategy to begin with and nearly all report missing major opportunities in the market. This is because where their company aims ‘to go’ is disconnected from what it is able to accomplish, the research by PricewaterhouseCoopers (PwC) indicates. It is important to note that there are two kinds of companies today – those who are facing major strategic challenges, and those who will face them. Most companies today are not aligning their aspirations, or strategies, with what they have the ability to actually do and how they do it, which is a potentially fatal mistake. The reason is that companies and their leaders are trying to remain nimble enough to meet the demands of changing and evolving markets, even though their most distinctive and powerful capabilities are inherently slow to change. Strategy and execution should be thought of simultaneously, and should be inextricably linked across corporations, and throughout every function. Recent surveys on business strategy conducted by PwC revealed that over 50 per cent of corporate leaders do not believe they have a winning strategy, while about 80 per cent of senior executives felt that their business strategy was not well understood, even within their own company. Only 8 per cent of the leaders were found to excel at both strategy and execution. The on business strategy sought to demystify the perennial question of “why are certain companies so successful?” The study covered 14 companies that have become ‘super competitors’ by closing the strategy-to-execution gap. ‘Super competitors’ are created when a company uses its capabilities system to carve out a central position that reshapes its industry. They are the market leaders around which industries coalesce. ‘Super competitors’ don’t just play the game well; they change the rules of the industry. Amazon, IKEA, Inditex (Zara), CEMEX, Starbucks and Apple, among others, participated in the research that resulted in the authoring of a book Strategy That Works, which provides a framework for success, and gives companies the tools to design and execute a winning strategy. The gap between strategy and execution is formed by business’ falling into common traps. Companies create this gap because strategy development and execution are silo-ed in most organisations. Companies are often incapable of defining what sets them apart, or their few (points 3-6 below) differentiating capabilities. Instead, they get distracted trying to manage a long list of capabilities, many of which are not differentiators, and are simply necessary. A company’s inability to focus on what it is able do best and what differentiates it can land them on a growth treadmill – chasing market opportunities without the capabilities to win. Companies can also get trapped in pursuing functional excellence, or striving to be world-class at everything, but end up mastering nothing. It is also common for companies to rely on reorganisations to drive change, assuming that moving people and processes around will eventually yield success. Constant reorganisation can be detrimental to a company’s growth. Another common trap for companies is cost cutting for growth. Many companies end up cutting costs across the board, and inevitably starve key capabilities and stifle growth. By constantly reacting to market shifts and changes without building internal capabilities to keep them ahead of the curve, create demand and realign to industry needs creates yet another trap for corporate firms. These traps can keep companies from being competitive in an evolving marketplace. A 2015 survey from ‘MindMatters’ on US innovation noted that American companies remain in an “innovation crisis” that was causing them to fall behind their global competitors. It study noted that more than four of five respondents (81 per cent) say their firms do not have the resources needed to pursue the innovations and new ideas capable of keeping their companies ahead in the competitive global marketplace. The research found that companies that embody the following five acts of unconventional leadership avoid these traps and use their capabilities to close the strategy-to-execution gap: Committing to an identity: Instead of chasing growth wherever it may occur - focus on your differentiating capabilities and grow by being consistently clear-minded about what you do best. Translating your strategy into the everyday Build and connect the cross-functional capabilities that deliver your strategic intent… instead of copying others. Put your culture to work Instead of organising and reorganising, celebrate and leverage your company’s assets and cultural strengths. Cut costs to grow stronger Instead of cutting costs across the board, stay focused and prune what doesn’t matter to invest more in what does. Shape the future Reimagine your capabilities, create demand, and realign your place in the market on your own terms… instead of reacting to changes by others. Companies that attain sustainable success are those able to look for early signs of change in the market, and those that routinely recharge their capabilities. Companies that close the strategy-to-execution gap can move on to become the ‘super competitors’ of our time. I will leave you with one famous quote from Michelangelo. “The greater danger for most of us lies not in setting our aim too highand falling short, but in setting our aim too low and achieving our mark.” The writer is a partner at PwC Rwandaflorence.w.gatome@rw.pwc.com

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Finding a winning strategy